Tuesday, 29 March 2011

Morgan v The Spirit Group Limited [2011] EWCA Civ 68: careful what you wish for

I yield to nobody in my admiration of the Court of Appeal.  The judiciary have a very difficult job, distilling years of argument into a tight and digestible set of facts that then have to be applied to the law.  And the Court of Appeal has to then make sure that, where the law is on a knife edge, it is developed in the right way.

Sometimes the Court of Appeal is hamstrung by what it considers to be outdated precedent, hence referrals up to the Supreme Court.  And sometimes the Court of Appeal does not even need to do that.  It may be in a straightjacket, but it can still kick.

Mrs Morgan broke her wrist in a nightclub.  Bad move for the nightclub as Mr Morgan is a solicitor.  He acted for ’er indoors in her claim against the nightclub operators.  He was successful; at least to a point.  There was no need for a trial on liability, just one day in court on the damages.  Mrs M was claiming around £40k, she ended up with just over £10k.

The problem was the next step.  Costs.  One day hearing, on damages alone, work beforehand nailing liability, maybe one witness, how much would you charge?  Few grand?  Twenty?  Think again.  £99,206.29.  Including VAT, yes.  But Mr Morgan was claiming ten times what his wife had been awarded.  Half of that was a success fee – yes, he was working on a conditional fee.

The judge was astonished and slammed it down.  He had harsh words about Mr Morgan’s conduct of the case and decided that the absolute limit for costs for a minor claim would be £20,000.  He threw in another five k on top of that to take into account the conditional fee and left it there as a summary assessment.

Mrs Morgan appealed.  Obviously she had a vested interest in hubby receiving another £75k in costs, especially as half of them would be pure conditional fee profit.  And, much to the Court of Appeal’s dismay, she was successful.  The Court of Appeal was constrained by precedent to state that the judge’s approach was legally flawed.  He couldn’t just guesstimate an appropriate figure without at least making a token attempt at a line-by-line analysis of the bill; after all, there could be special reasons behind the escalation in costs.

The only conclusion was that the costs had to go back and be re-heard on a proper, detailed, summary assessment.  But there was a sting in the tail that contains a poison fatal to Mrs Morgan’s chances of that bonus £75,000.  The Court of Appeal said that the judge was right in saying that this was a basic matter.  Something that could easily have been dealt with by the Court under the fast track procedure.  Fast track.  I.e. a regime that puts a strict limit on costs.  For a start, the advocacy for the final day’s hearing would be limited to a few hundred pound.  And, as the nightclub owner’s brief put it before the Court of Appeal, and which the Court of Appeal pointedly included in its judgment, the costs on detailed assessment would probably be something south of the £25k Mrs Morgan felt was insufficient.

The Court of Appeal giveth, and the Court of Appeal taketh away.  Blessed be the name of the Court of Appeal.

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